Sherry L. DeHoog

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
SHERRY L. DeHOOG,
Debtor. 	No. 13-08-12312 SF
FINDINGS OF FACT AND CONCLUSIONS OF LAW
and ORDER DISMISSING CASE
This matter came before the Court for hearing on an Order to
Show Cause why case should not be dismissed for failure to comply
with credit and budget counseling requirements. 	This is a core
proceeding.
The sole issue is whether the case should be dismissed for
failure to comply with the budget and credit counseling
requirements of 11 U.S.C. § 109(h)(1) and (3), which state:
(h)(1) Subject to paragraphs (2) and (3), and
notwithstanding any other provision of this section, an
individual may not be a debtor under this title unless
such individual has, during the 180-day period
preceding the date of filing of the petition by such
individual, received from an approved nonprofit budget
and credit counseling agency described in section
111(a) an individual or group briefing (including a
briefing conducted by telephone or on the Internet)
that outlined the opportunities for available credit
counseling and assisted such individual in performing a
related budget analysis.
...
(3)(A) Subject to subparagraph (B), the requirements of
paragraph (1) shall not apply with respect to a debtor
who submits to the court a certification that--
(i) describes exigent circumstances that merit a waiver
of the requirements of paragraph (1);
(ii) states that the debtor requested credit counseling
services from an approved nonprofit budget and credit
counseling agency, but was unable to obtain the
services referred to in paragraph (1) during the 5-day
period beginning on the date on which the debtor made
that request; and
(iii) is satisfactory to the court.
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(B) With respect to a debtor, an exemption under
subparagraph (A) shall cease to apply to that debtor on
the date on which the debtor meets the requirements of
paragraph (1), but in no case may the exemption apply
to that debtor after the date that is 30 days after the
debtor files a petition, except that the court, for
cause, may order an additional 15 days.
(Emphasis added.)
The facts are not disputed. 	Debtor filed her chapter 13
petition in this case, through Counsel, on July 17, 2008 at 3:13
p.m. MDT. 	Doc 1. 	Debtor filed her certificate of the (first)
budget and credit counseling at the same time, doc 3, which
showed that she had taken the counseling on January 4, 2008,
clearly more than 180 days before the filing of the filing of the
petition. 	Virtually immediately after the filing, it was noticed
that her counseling certificate was outdated, and Debtor was
advised to immediately take another course in order to at least
have an argument to keep the case alive. 	Debtor promptly did as
advised, completing the course at 5:05 p.m. MDT (6:05 CDT) on
July 17, 2008, according to the second certificate. 	Doc 8. 	So,
in summary, Debtor did not complete the budget and credit
counseling course during the 180-day period immediately preceding
the filing of her petition, nor did she submit with the petition
a certificate that stated she was unable to obtain counseling
during the 5-day period preceding her petition. 	These facts
would suggest that under the statute she “may not be a debtor
under this title.”
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Page -3-
An order to show cause why the case should not be dismissed
issued on July 17, 2008, and on July 28, 2008, the Court
conducted a hearing on the order to show cause. 	At the hearing
Debtor’s counsel ably and vigorously argued that dismissal was
not required, and indeed that the case should not be dismissed.
Besides pointing out that the mistake was entirely inadvertent,
Counsel relied heavily on In re Manalad, 360 B.R. 288 (Bankr.
C.D. Calif. 2007) (finding dismissal discretionary based on a
three part test), in which the Court ruled that a debtor’s
failure to obtain the requisite budget and credit counseling
prior to filing the petition was not a jurisdictional defect and
that dismissal was not otherwise mandated.
The Court need not decide whether compliance with the
counseling requirement is jurisdictional; even if it is not, pre-
petition credit counseling is required except in situations
plainly set forth in the statute. 	The Court has reviewed the
statute and finds it clear. 	Debtor does not meet any of the
statutory exceptions.
Section 109(h) does not state the consequences for failure
to obtain credit counseling during the appropriate time window.
The Courts have not agreed on those consequences. 	Compare In re
Manalad (court has discretion not to dismiss) with In re
Ruckdaschel, 364 B.R. 724 (Bankr. D. Id. 2007)(holding that
strict compliance with section 109(h) is required on pain of
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1 As stated in Francisco, 386 B.R. at 856, n. 7:
“In cases in which an attorney represents the debtor and which
are dismissed because the counseling does not take place within
(whether before or after) the 180-day period, the Court has
adopted the practice of requiring (if necessary) the attorney to
reimburse the debtor for the filing fee and to assist the debtor
at no charge in refiling the case (if the debtor chooses to use
that attorney again), including filing any stay motion that may
be required pursuant to §363(c)(3) or (4). 	Certainly no order is
required in this case.”
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dismissal). 	Nor have the courts agreed, with respect to those
cases that cannot continue, whether the petitions in those cases
should be dismissed or “stricken”. 	See In re Francisco, 386 B.R.
854, 862 (listing cases), reversed on other grounds, 390 B.R. 700
(10 th Cir. B.A.P. 2008). 	The consequence in a case in which
there has been a failure to comply with the budget and credit
counseling requirement is that the case should be dismissed. 1
IT IS ORDERED that this case is dismissed without prejudice.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	September 17, 2008
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copies to:
Gerald R Velarde
2531 Wyoming Blvd NE
Albuquerque, NM 87112-1027
Kelley L. Skehen
625 Silver Avenue SW
Suite 350
Albuquerque, NM 87102-3111
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
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